Major players in the corporate reporting field joined forces this week to help businesses navigate the complex sustainability reporting landscape.
In a move that they say will “revolutionize” reporting, the World Business Council for Sustainable Development (WBCSD), the Climate Disclosure Standards Board (CDSB) and Ecodesk created the Reporting Exchange, a freely available, multi-lingual, global sustainability reporting knowledge platform. This platform will provide businesses with relevant reporting information at the national, regional and international level, the partners say.
Using a crowdsourcing model, the Reporting Exchange will identify the reporting regulations, rules, policies, practices, initiatives, standards, codes and guidance which make up the reporting landscape as it evolves over time. It will be available in open beta format at the end of 2016, allowing public users to share their feedback before the platform’s planned global release in mid-2017.
Rodney Irwin, managing director of the Redefining Value Program, says the new platform is a response to changes in what consumers, investors and other stakeholders expect and demand from corporations.
“We’ve seen that the changing expectations of corporate performance and transparency have catalyzed activity around corporate sustainability reporting creating an increasingly complex and fragmented reporting landscape which is difficult for business to navigate,” Irwin says. “We hope the Reporting Exchange will help clarify this space.”
The corporate sustainability reporting landscape continues to evolve as companies look for better ways to inform stakeholders, investors and the public about their sustainability initiatives. Looking ahead to 2016 and beyond, companies, industry associations and reporting organizations search for ways to reduce the burden of sustainability reporting while increasing the value of these reports.
“We’re seeing that many organizations are looking for more precise ways to measure and report on their sustainability efforts,” says Brian Sansoni, vice president of sustainability initiatives, American Cleaning Institute. “I think we’ll see an increased use of materiality assessments, which identify and categorize the top concerns of company stakeholders and leaders. They really can help companies identify their key risks and opportunities and better inform their business strategies.”
Internal and External Benefits
Better-informed business strategies translate into cost savings and revenue increases. And, as a recent Harvard Business Review article pointed out, effective sustainability reporting can make good companies become “great” businesses, providing both internal and external benefits.
The internal benefits of sustainability reporting include gaining an increased understanding of risks and opportunities within your company, which not only helps the company to operate more efficiently and streamline costs, it also helps it to develop strategic, long-term environmental health and safety initiatives and policies.
External benefits of consistently publishing a sustainability report include building trust and reputation through transparent reporting, which in turn helps to increase brand loyalty.
Unfortunately, for many companies sustainability reporting is more of a burden than a benefit. Efforts to produce longer reports and reporting to various organizations becomes too costly in terms of time and resources, which means companies can’t keep up.
Jane Stevensen, CDSB managing director, says the Reporting Exchange aims to fix this problem by enhancing and consolidating corporate disclosure of sustainability performance and promoting integrated management reporting. “Driving consistency sits at the core of everything we do,” Stevensen says.
“The explosion of reporting practice is a natural reaction to the drive for change, and to address the challenge for companies to be accountable for their impacts on the economy, society and the environment whilst creating value for all stakeholders,” Stevensen says. “However, unresolved tensions in corporate sustainability reporting practice can produce variation in the quantity and quality of information, which in turn undermines its usefulness for decision making by company boards and investors.”
Measuring Value Beyond Financial Capital
In another effort to help companies streamline reporting and produce more useful reports, the Global Reporting Initiative’s Sustainability and Reporting 2025 project looks at future trends in sustainability reporting.
Dr. Nelmara Arbex, GRI’s senior advisor for innovation in reporting, says environmental, social and transparency trends will only intensify for companies in the next decade.
“The value of companies will be measured through a wide range of indicators expressing value creation and destruction of, not only financial capital, but also human and social capital,” Arbex says. “Consequently, the content of reports in the next decade will be focused and show strategic commitment to tackle the challenges society will be facing. Reports will be in digital format and tagging of information will allow stakeholders easier access and comparison of data.”
This will benefit stakeholders, Arbex says, by giving them greater insight into companies’ decision-making processes. But businesses can benefit from these trends, too, “if they recognize and embed them in their strategic planning and governance models,” she says. “Companies that are transparent, coherent and interactive in their communications, will be able to build trust and reputation.”
Push for Integrated Reporting
A report published earlier this year by consultancy Black Sun surveyed more than 350 CEOs, CFOs and COOs from across the globe and found that only 25 percent of respondents are confident that their current reporting meets the information needs of investors and other external stakeholders.
The study also found 91 percent felt that the connectivity of financial and non-financial information would help to effectively identify and manage company risks, with 89 percent agreeing it would help to present a more forward-looking, long-term view of performance.
The International Integrated Reporting Council says this report signals a shift toward integrated reporting; some 28 percent of companies survey said they currently incorporate levels of integrated reporting into the process.
In May, IIRC alongside the other biggest global names in corporate reporting — CDP, GRI, CDSB, the Financial Accounting Standards Board, IASB, ISO and SASB — published a landscape map that provides a snapshot of a comparison of their frameworks, standards and related requirements through the lens of integrated reporting as part of an initiative designed to respond to market calls for greater coherence, consistency and comparability between frameworks, standards and related requirements.
“Let us be clear that Integrated Reporting is all about understanding how an organization is creating value over time by articulating the strategy and business model,” says Jonathan Labrey, IIRC chief strategy officer says. “In a sense you could say that Integrated Reporting is changing the current reporting cycle from accounting for the financial outcome, or accounting for its impact on society, to accounting for the whole business.”
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